Beruflich Dokumente
Kultur Dokumente
17. At what percentage does the home office bill the branch for merchandise shipments based on billed price?
18. How much is the true profit of the branch?
Questions 19 to 25 are based on the following:
BA Inc., YA Inc. and NI Inc., are parties to a consolidation agreement. Their respective net assets, retained earnings
and estimated earnings as of January 1, 2016 are as follows:
BA Inc. YA Inc. NI Inc.
Net asset P491,400 P435,600 P333,000
Retained Earnings 176,400 75,600 108,000
Estimated annual earnings contribution 41,742 35,568 27,990
A new corporation, HERO Inc., shall issue a single class of shares. Book value of their respective net assets are
equal to their respective fair value. Earnings in excess of normal earnings of 8% are to be capitalized at 10% in
determining goodwill (earnings contribution) of each companies. HERO Inc. shall issue ordinary shares at P20 par
value equal to total net assets transferred plus goodwill. No Share Premium is recorded in all three Companies
before combination and each of them only has one class of share each having par value of P10. Assume that after
consolidation, HERO Inc. distributed cash dividends amounting to P240,000.
19. How much is the goodwill to be recorded?
20. Jose Rizal is a shareholder of Ya Inc.’s 5,400 shares. How many new shares will he receives?
21. Andres Bonifacio is a shareholder of Ba Inc.’s 6,300 shares. How much will he receive from the cash dividend
distribution?
22. Instead of giving ordinary shares to earnings contribution, HERO Inc. will give 8% fully-participating
Preference shares with par value P100. How many preference share will NI Inc. receive?
23. Using information in #22, how much will Emilio Aguinaldo, a shareholder of Ya Inc.’s 7,200 shares receive as
cash dividends?
24. Disregard the arrangements for the issuance of new shares given above. Assume instead that HERO Inc. plans
to issue 100,000 ordinary shares with par value P12 to be divided to each company based on their net assets and
earnings contributions. How many ordinary shares will BA Inc. receives?
25. Using information in #24, how much will Apolinario Mabini, a shareholder of NI Inc.’s 4,050 share, receive as
dividends?
Questions 26 to 28 are based on the following:
Presented below are items taken from the unadjusted trial balances of BERI Co. and its branch on Dec. 31, 2015.
Home Office Books Branch Books
Shipments to branch 324,000
Allowance for overvaluation 107,892
Shipments from home office 421,200
Inventory, Jan. 1 58,968
Inventory, Dec. 31 52,650
Purchases ?
Sales 583,200
Expense 55,080
It is the company’s policy to bill all branches for merchandise shipments at 30% above cost. Realized profit on
overvaluation amounts to P99,792 for the year.
26. How much of the branch inventory in January 1 represents purchases from outsiders?
27. How much of the branch inventory in December 31 represents purchases from outsiders?
28. If the correct net income of the branch amounted to P70,632, how much is the purchases for 2015?
Pan Corporation purchased 4,000 shares of Sal Company on January 3, 2016. Additionally, Pan purchased
additional stocks from Sal out of its unissued shares at the current market price of P30. This gave Pan a P75%
controlling interest. Sal paid P7,000 for the cost of issuing and registering the securities. Pal paid P75,000 cash for
business combination expenses. Sal Company’s property and equipment had a fair value of P80,000 more than the
book value shown, while its long-term liabilities has a market value of P90,000. All other book values approximated
fair values. Pan borrowed enough cash for this acquisition and still had P50,000 cash and cash equivalents
balance after all the transactions.
In the consolidated statement of financial position on January 3, 2016:
32. How much is the non-controlling interest if the parent company used the Partial Approach in recognizing gain
or goodwill?
33. How much is total current assets?
34. How much is total non-current assets?
35. How much is retained earnings?
- END –
SOLUTION
TEST I
1. B 2.D 3.A 4. B 5. D 6. B 7. A 8. B 9. B 10. D
11. A 12. C 13. D 14. A 15. C 16. D 17. B 18. B 19. B 20. A
21. A 22. D 23. D 24. B 25. C 26. D 27. D 28. B 29. A 30. C
TEST II
1. 140% of cost 18. P3,150
2. P 24,000 19. P45,000
3. P 42,000 20. 3,321 shares
4. P 1,667 21. P18,968
5. P 25,785 22. 3,330 preference shares/135 shares
6. P 15,000 23. P16,287
7. P 515,000 24. 39,517 shares
8. P 260,000 25. P11,470
9. P 430,000 26. P12,636
10. P 375,000 27. P17,550
11. 8,000 shares 28. P129,762
12. P 53.75 per share 29. P256,000
13. P 235,000 / P240,000 30. P708,000
14. P 170,000 31. Share Capital 240 RE 200 NCI 52
15. P 35,300 32. P111,250
16. P 76,000 33. 483,000
17. Mark Up is 16.67% 34. P656,250
Based in billed price 35. P125,000
1. Net income reported P60,000 against true of P15,000= realized gross profit P96,000
CGS: 70,000 +350,000=84,000=336,000 – RGP 96,000= True CGS 240,000
96,000/240,000= 40% of cost or billed at 140% of cost.
2. Invty end of 84,000/1.4 x .4= P24,000
3. 36,960 + 28,000= 64,960 -14,560 (21,000-2,800=18,200/1.25) = P50,400 /1.2= P42,000
4. Cost of sales (beg and ship of P64,960-mdse destroyed 50,400= 14,560/1.2 x .2= realized 2,427.
Gross profit (16,800-14,560 – 3,000)= 760 loss - 2,427= 1,667
5. Net Cost of shipments 302,925 – invty end 127,500= cost of saled 175,425 / 1.25 x .25=
realized 35,085 – net loss 9,300= 25,785 true profit
6. 180 / .8 = 225 – 210 (SHE 210- AR-10 + 50) = 210 -225= P15,000
7. 225 x .2= 45 NCI plus controlling interest SHE of 470= P515,000
8. 500 consolidated + AR 10 – Parent 250 (300-50)= P260,000
9. 660 -260 + 30= P430,000
10. 500 – 250 + 175 -100 + 400 -250 – 240 + 140= 375,000
11. Share capital 240-200=40,000/5 / = 8,000/ shares
12. P430,000 / 8,000= P53.75
13. Investment 190 + b) 50= P240,000 – P5,000 = P235,000
14. 240 – c)-50- b) 20 = P170,000
15. 100- 45,300 = P35,300
16. 100 – c)14- d)10= adjusted of Investment P76,000
Adjusted of HO Equity 76 - a)2.7 - b) 2 - e) 12- c) 14= unadjusted 45,300
17. Invty 1/1 15,750/1.05= 15,000 + shiipments 88,800=103,800
17,300 allow/103,800= 16.67%
18. Invty End 17,640/1.05= 16,800 x.16666= 2800 unrealized – 17,300= realized 14,500
Net loss reported (120 – 91.35-40,000= -11,350 + 14,500= P3,150 net profit
19. Total consideration is P1,305,000 – net assets of P1,260,000= P45,000 goodwill
BA YA NI TOTAL
Net Assets 491,400 435,600 333,000 1,260,000
Earnings Contributions 24,300 7,200 13,500 45,000
Total 515,700 442,800 346,500 1,305,000
Shares issued 25,785 22,140 17,325 65,250